News Corp. Investor Day: Rupert Murdoch Excited to 'Do It All Over Again'

10:55 AM PDT 5/28/2013
by
Georg Szalai
,
Paul Bond

UPDATED: The media mogul recalls the launch of Fox News, acknowledges some "spectacular" mistakes and says the post-split publishing company will prove skeptics wrong.

News Corp. chairman Rupert Murdoch kicked off a Tuesday investor day for the publishing company that will retain the conglomerate's name after a split into two in late June by lauding his company's legacy of risk-taking, financial success and proving critics wrong.

"This is a very, very exciting day for me," the 82-year-old Murdoch said, lauding the "extraordinary" opportunity that the company split provides him -- "the chance to do it all over again."

The media mogul acknowledged that he has made some mistakes, and "even some spectacular ones," over the decades. But he said that his team has "again and again" defied expectations, and the new News Corp. will do the same. He argued that the company's businesses were "undervalued" and underappreciated by many investors.

Murdoch cited The Simpsons, saying that "people said animation was just for kids" when the Fox show launched. Now, it is the longest-running U.S. primetime comedy and has made News Corp. and others a fortune, he said.

Murdoch also recalled the launch of satellite TV giant BSkyB in the U.K. "I could have done without the stress and nearly bankrupting the company and my family," but the company is making a lot of money now, he said.

And he called out Fox News for rising to the top of cable news networks after taking on CNN. CNN founder Ted Turner had predicted "he was going to squash me like a bug," Murdoch recalled. lauding "the genius of [Fox News boss] Roger Ailes." The mogul also highlighted that Fox News now makes more than $1 billion in annual operating profit.

With the separation of the entertainment businesses next month, "there is opportunity everywhere" for new News Corp., Murdoch said.

Robert Thomson, the company's CEO, said that globalization and digitization are key trends that will provide upside for the firm.

"Technology, not content, is a commodity," he said about the relationship between content and distribution. "Technology is a canvas for our content."

Thomson also said that investors have some misconceptions about new News Corp. It is not as advertising-dependent as people think, and ad revenue will further decline in terms of its contribution to total company revenue, he said. Thomson cited the rise of subscription businesses, the growth of News Corp.'s education business and more opportunities in the business-to-business field.

Addressing challenges, he acknowledged that the ad market has been volatile. He also signaled that underperforming assets would be discontinued and costs controlled and cut.

In another representation, Mike Darcey, the former BSkyB top executive and new CEO of U.K. newspaper arm News International, said that while U.K. economic conditions "continue to be challenging," there is much upside in new digital initiatives and the like. He said his goal for the U.K. arm was "sustainable profit growth."

News Ltd. CEO Ken Williams boasted of the strength of the Australian business, with Foxtel being the leading provider of subscription television and seven of the top 10 newspapers belonging to News Ltd. More than half of all adults living in Australia read a News Ltd. newspaper, Williams said.

Bedi Ajay Singh, the CFO of the soon-to-be spun off News Corp., said had the company already been an entity unto itself in fiscal year 2012, it would have generated $9 billion in revenue and about $408 million in available free cash flow.

After the spinoff, News Corp. will have $2.6 billion in cash, and the company intends on sharing it with investors in the form of a cash dividend -- the size and timing of which are yet to be determined -- and via a $500 million "opportunistic share buyback."

Singh also said the new News Corp. will pursue acquisitions.

Shares of News Corp. rose 12 cents Tuesday to $33.37. The stock is 51 percent higher since the company announced 11 months ago its intention to split into two separately traded entities.